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Sub-prime mortgage crisis likely to worsen

READ MORE: Sub-prime mortgage crisis likely to worsen
There is disturbing news about the sub-prime mortgage crisis. The Wall Street Journal reported this weekend that the mortgage meltdown will likely get much worse before it gets better. That could include southeastern North Carolina as well. The number of US homes in foreclosure is expected to keep soaring. Estimates predict in the months to come, there will be one foreclosure filing in every 196 households in the nation, a 34 percent jump from just three months earlier. Such data suggests more Americans could lose their homes than ever before. The reason for the spiraling mortgage mess can largely be attributed to millions of adjustable-rate mortgages resetting in the months to come, giving them a higher interest rate as required by the loan agreements. And that could leave many homeowners unable to make their payments. Financial planner Ross Marino says despite a still relatively strong real estate market, southeastern North Carolina is not immune to the sub-prime meltdown. Financial experts predict the next wave of the mortgage crisis could not only force people out of their homes, it might also spiral throughout the economy. Lenders are now tightening their standards, and borrowers are having a harder time refinancing loans.

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Lets Blame The Wrong Person

It seems rather crass to portray folks that got caught up in this mess as materialistic gotta have, gotta have types. I know several people throughout the country that are getting hammered by this. From what I remember about this situation, it started with a housing boom that was manufacturered by the mortgage industry (and other friendly people). They saw opportunity, deregulation and cheap low interest money. Lots got rich. So what if their mortgage business busts, they are still rich. The public will most likely bail them out anyway. Wonder what they are going to do with all of them houses too? Next, (from what I vaguely remember) is that rents went up when the housing prices soared. Then the tax man decided to revaluate (remember?), even though it had not been too long since the last revaluation. Then the Insurance Companys couldn't stand it anymore. They raised rates a paltry 20%+ around here. Seems like interest rates have been slowly climbing over the past few years too. Some of these people who took these subprime mortgages where renting and saw that they could buy a home with what they were now paying in rent. No other type of loan was available to them. Let's not forget all of the people who lost their jobs due to NAFTA and other so called free-for-all oopps, free trade agreements. There are many out there whos pay has been cut severly. And last but not least, should I not mention that the bankruptcy laws were conveniently toughened to keep the little heathens from keeping their homes when they bust! Combined, all of these issues came to play and now we have millions in the lower and middle class who are in big trouble, especially since the Chinese are driving the price of gas out of sight. A friend (who's getting burned) in Cleveland, told me that in that area, no other type of loan was being offered, no matter who you were. He had to take one of these loans. Yea, yea, I've heard it before and even said it myself, that living in America does not guarentee you a home...BUT, this is nothing more than a land and money grab by a pack of legalized thieves. Hopefully, you won't have to walk a mile in their shoes.

The wrong person?

Anyone who is too "intellectually challenged" to read the mortgage they are signing, and cannot understand the meaning of the oh-so-complex words "adjustable rate" deserves exactly what they get. You can blame your fantastic conspiracy of NAFTA, China, the insurance companies, the mortgage companies, local tax authorities, Bigfoot and the aliens from Roswell, but the simple fact is that unethical mortgage brokers and stupid borrowers created this mess. BTW, even if we believe your friend's nonsensical tale of nothing but ARMs being offered in Cleveland, can you provide pictures of the gun being held to his head as he was forced to sign?

Response to Commonsensenotc...

Wow, I had no idea my blog was not put together well enough to get my point across. Please allow me to address this as to correct the misconceptions. As for my friend from Cleveland, he is a contractor in the nuclear industry and not at all "intellectually challenged". He moves every once and awhile as jobs come available. I have absolutely no reason not to believe him. Coupled with news reports about the Cleveland area being hit the hardest, confirms what he has told me. He could not get a fixed rate loan, at all. Gun to the head?...come on now. Up against the wall? I think so. As for the fantastic conspiracy, I never stated that the Insurance Companies, NAFTA, China and others were part of a conspiracy. I was simply trying to point out that the lower and middle class are being soaked. Taxes & Insurance are part of a house payment. When they go up and wages go down, it hurts. I did say the Mortgage Industry and other friendly people were at fault, so we are somewhat in agreement. My idea of other "friendly people" (a sarcastic statement), is mostly our wonderfiul lawmakers who allowed such deregulation as to set the tone for a big money grab. Don't you find it a bit strange that the CEO of Citi Group walked away with 60 million dollars severance and now they are whinning that they are broke? Do you not find it appalling that our friends, the Saudi's, have bought 11% of Citi Group? I wonder if this includes seized property? As for the stupid people, yes, I sure there are many out there, after all look how we vote. I bet that if I were in my 20's trying to get a start in life without any credit history, I would have had to take one of these loans because I would not have been able to get a desirable fixed rate loan. I also bet that some of these stupid people saw a housing market spiraling out of control, locking them out of the market possibly forever in obtaining a home. So they had to act. I've read a lot of your blogs and I agree with you somewhat. I just hate you missed my point and tried to make me sound like I was part of the tinfoil hat crowd.

No harm, no foul Renfield

Sorry if I misunderstood you, but it just seemed as if you were throwing in far too many influences that supposedly caused or added to the crisis. I saw that shopping list and thought you had joined the tinfoil hat crowd. But as far as buying a house "right now, honey" no one HAD to act. If you can't afford something right now, the fact that the price is rising on that item and it may be far more expensive in five years doesn't alter the fact that YOU STILL CAN'T AFFORD IT NOW. ARMS were originally intended for a niche of buyers, and in fact, the twenty-something college-graduate, entry-level paid today, mid-level manager in five years was exactly who they were designed for.....originally. We got where we are today because of individual and small corporate thirst for greater and ever-increasing gain. Addressing the most contentious cause first, we (as a people) have come to believe that everyone deserves everything, regardless of their ability to pay for it. I don't care if it's a cell-phone, a nice car, health insurance, or a nice house, "I have a right to all of them just as you do." (So what if you can afford them, but I can't?) Some people bought homes based upon what they wanted, not what they could afford. But truth be told, families losing homes is a small facet of the problem. Most of those "stupid borrowers" I mentioned weren't families. The largest cause was speculators suddenly saw ARMs as a short-term float to finance house flipping, insead of a long-term, low-interest way to finance your primary or vacation home. The news tells us about the ever-increasing number of foreclosures, but it doesn't tell us how many of them are failed business ventures, rather than families losing their homes. That number is rumored to be a staggering percentage, house flippers who got caught when their house wouldn't sell in the softening market and the bills came due. We also saw an explosion of mortgage brokers, many of which employed totally unethical practices in qualifying people who were truly not in a financial position to qualify. Even the big banks, the least guilty in the crowd, bear some responsibility. Just as Enron's bankers knew, "This is too good to be true," the banks that were issuing and bundling mortgages for sale had to realize that the inordinately high number of qualifiers coming from cities such as Cleveland was likely a house of cards in the making. The institutional banks and brokerage houses trading CMOs had to realize the same thing. But the money was too good...no room for doubt.... Do not miss the political aspects of this "crisis" that I mentioned elsewhere on this board. You are hearing things on the news that make absolutely no sense whatsoever from an economic (or common sense) point of view. There are people who intend to inflate this situation until it becomes a major issue on the 2008 election. One of the most laughable is the people they interview who are sooooooo depressed because their house isn't worth what they paid for it. It will be a bleak Christmas in their home this year! I am tired of screaming at my TV, "If you're not trying to sell your house RIGHT THIS MINUTE, what do you CARE what it's worth???!!! It's your home! It's where you live!" Think about it: Do you get your home appraised before you take a vacation or buy a new car? In closing, I assure you that standard thirty and fifteen year mortgages have always been available in Cleveland. Your friend hasn't given you every detail of his experience. There had to be some combination of his income, down payment amount, or desired loan amount that led the bank to conclude that they would only agree to finance that amount if he had lower payments initially, with higher payments when he was better able to pay them. Or he may have been unfortunate enough to have been sitting in front of a sleaze who was getting a better commission for ARMs that week. Either way, I would have shopped around or temporarily rented.

You pay for what you own

No bail out, not for the companies who rushed to make profits off the dreams of others and not for the borrowers who didn't/wouldn't research their mortgage agreements. Let the makret correct itself. Don't punish the rest of us because of fools.

Amen brother, amen!

This is a bad situation, but it's only becoming a crisis because of a thousand Chicken Littles running around screaming that it's the end of the world. Meanwhile, play the volatility in the high quality bank stocks that you know are going to survive. I buy three or four stocks on every one of these catostrophic sell-off days, then immediately put in a sell order at a buck or two higher. As soon as they sell on one of the big recovery days, I put in a buy order at a few dollars lower, and start the cycle all over again. This market volatility it total nonsense, but you can make money on it!

We are being punished

We are being punished already because of fools. Home prices are being pushed down and jobs are paying less. It is fine to let the market correct itself, but this was caused by the Federal Reserve raising rates too much and not lowering them fast enough which is what they have done for the past 50 years or more. The Fed Reserve is at fault for not letting the market correct itself. The Fed Reserve needs to be investigated and corrected. I feel sorry for people who had nice paying jobs years ago and now have squat. It could be ANY of us. It is Bull!!!!

watch the movie

zeitgeistmovie.com will show you where the money is. Watch it, 2 hours.

Help!!!!!!!!!!

We never realized how much of our income came from the mortgage market.I am/was a mortgage Broker now I am not making much money.But every other Job I try to get is laying off due to the slow down. No one can afford a maid to clean there home and no one is paying worth a hoot on the Treasure Coast. I used to make $14.00 a hour as a medical Assistant 10 years ago before being a mortgage broker. No one pays that now. ???????? I cant go back to that line of work and get 8.00 a hour. That wont cover Food , electric and water.Some one needs to do something quick before we end up in a real mess and I dont mean just our credit reports messed up for the next seven years for a crisis we cant avoid.Equifax and the rest will make us pay for ever for a problem we did not create.OVER CORRECTION??????????????

Seriously?

You are just realizing this... I bet you've been writing the ridiculous ARMs. No sympathy.

The federal reserve raised

The federal reserve raised interest rates far too quickly to slow the real estate boom down. They kept raising the rates resulting in higher mortgages and doubling adjustable rate mortgages. Do they want the American people to lose homes and go bankrupt?? It seems like it. Interest rates need to be at 4 percent to 5 percent to slow the losses of homes and jobs. I doubt they will get there because the Federal Reserve is run by a bunch of millionaires who don't care about people losing houses or jobs.

The Fed?

The FASTER they raise rates, the FASTER the economy slows down, to include loan origination. If anything, they were too SLOW to raise rates. They didn't raise rates to cause problems in the mortgage industry - they raised them to head off the rising prospect of inflation, which looked like it was becoming a problem earlier this year. It's still a concern, and you're not likely to see any cuts soon...especially with the dollar's worth being counted in matches. Don't blame the Fed. Blame idiots who agreed to debts they had no hope of repaying and unethical mortgage brokers who qualified anyone and everyone simply to earn a commission. The current situation is bad, but it is grotesquely overblown in the media. If you closely analyze some of the bizarre statements you hear and read, you will note that there's a political aspect to the current situation. Democrats would love nothing more than the economy being totally in the crapper when November rolls around. I certainly can't explain why, but many of those millionaire New York bankers at GS, MS, LEH, etc are left-wing liberal nutjobs who are forsaking their economic ethics to advance their political goals.

Help?

I realize when you made good money you probably have a big house and drive a new car. I came from making 17.50 hr up north and I had to adjust to 8.00 hr. I am married with 2 children 8 & 11. My husband is on disability which pays nothing, not even my mortage. It is desperatly hard but take what you can get for a job, anything is better then nothing. I have to make arrangements with the electric company to pay my bill, I don't have a new car, but as long as I'm a parent it is my responsibilty to support my kids and I do what I have to and sacrafice my needs. P.S. I don't have insurance, my kids do though.

didn't bank any?

I'm guessing you didn't put anything away in savings? What a shame.

put any aside?

get real-the cost of living up north is double what it is here-at least is was. nj has the highest auto insurance in the nation, for example, and the taxes on your home are 10 times what we pay for down here. this is the sad truth so dont assume that that person was able to save anything out of his/her paycheck. dont be so quick to judge until you know all of the facts.

savings

Actually I did save some, I'm not stupid but how much do you save? Or, do you still live with your parents? If I had to either put money in my savings or feed, shelter and make sure they have warm water to clean with I would not opt to save. In that instance you have to live the moment. And no, I can't save every week.

Nope

Nope, I bought my home back in '94 at the age of 23. It sounds like I made better choices on how to live my life then you did. I have 8% of every paycheck go into my 401k, have another chunk automatically drafted and put into a savings account, so I save plenty. Be it never reaching my hands I don't have the temptation to go buy that big TV or other un-necessary stuff. By living in the moment is what put you in this position in the first place. Don't breed what you can't feed.

Guesty not to call you out,

Guesty not to call you out, but after reading several of your posts you seem to have very condescending comments. People make mistakes, people don't always live there lives according to what "Guesty" deems acceptable. I bet you are the real life of your company's Christmas party. Please note the sarcasm

I believe that Guesty's comments....

...don't necessarily mean that we have to live our lives according to his standards, but that we should take responsibility for the life we choose and not complain about it. We all have to realize that our life is OUR product, and when a person falls on his sword, he or she is the person ultimately responsible to recover and carry on. You can't piss-n-moan while waiting to be saved. Far too many people expect society or the government to overcome their individual mistakes and make their life well again. The entire nation would be stronger and more prosperous if we all embraced the self-reliance and individual responsibility that were commonplace in earlier generations.

No problem scally

I know people make mistakes, just don't cry to the whole world and expect others to bail you out of it. This is what builds character, make a mistake, learn from it and be a smarter person. I have very little patience for "boo hoo, poor pitiful me. Somebody (government) take care of all my needs & wants." PS We do have fun at the party, you seem mad because you are not invited!

one more thing

Not to insult you but it's a common mistake...does that house you have come with wheels by any chance?

Yep

I own my 3rd house. Married 22 years. Vacation every year, taking kids around, canada last year, disney before. I've been on my own since 17. Dad died mom moved. Invested in an investment company that DRAFT'S every month. Brand new house last year, new car. Tell me, what else do you have? Family you support? What I said was you have to do what you have to do. Take care of your CHILDREN...guess you don't have that...Oh, and I did just buy a golf cart for the kids. What to match that? Remember, if you die tomorrow your money means NOTHING!

2+2=7? doesn't add up

It may mean he/she never had to make arrangements with the power company. I notice you contradict your earlier post a couple of times. Before you said you don't have a new car, here you say you do have a new car. Before you said you couldn't even pay the mortgage, but now you say you have 3 houses. Me smells a rat, called Guest555!

good

I was going to say the same thing about Guest555 but WWAY censored my post. To answer your earlier post Guest555 , no wheels or brake lights on my house. You must be thinking of yours.