Opinion: Foreclosure crisis

After reading and hearing about the foreclosure issues facing lenders and homeowners alike lately, I’ve come to the conclusion that there are some misconceptions out there. I’d like to say a few words . . .

While it is true that many of those properties in foreclosure are owned by folks who bit off more than they could chew, there are a good number of properties owned by honest, hard working people that have hit hard times. I hate that some people think that only people who bought with zero down at high prices and bought more than they could truly afford are the ones in foreclosure. Simply not true.

Case in point: I have a friend I’ve known for literally most of my life who bought a house about 20 years ago and has until the past year, had an excellent job. She’s paid her mortgage faithfully for those 20 years and refinanced a couple of years ago to pay off her student loans.

Last year, she lost her job when she had to go back to school to update her degree. Her former employer promised to re-hire after she finished and to date, they have not.

Now, please don’t tell me it’s only dumb idiots who are facing foreclosure or that just because a person is facing foreclosure, they must be a dumb idiot who bought more than they could financially handle and they deserve to lose their home. That totally pisses me off, quite frankly.

Homeowners do deserve some form of help and I certainly hope they are allowed some.

~ Annie

Real estate local: Tanked

In many areas of the country, the real estate market has slowed to all but a crawl. And although it is certainly getting slower here in the Seattle area, I think we’re still in better shape than many cities. Although, I just heard today that the home prices in suburban areas just outside Seattle and Bellevue are falling by as much as $100,000. That’s huge for a lot of people.

This is good news for buyers, actually. Even though the mortgage industry is in crisis, people might still be able to purchase homes – and even homes they couldn’t touch a year ago – because prices are now becoming more affordable. Additionally, the Fed lowering interest rates again might be helpful. I’m not sure that’s they right way to “stimulate” the economy, though, but that’s a topic for another post.

Frankly, I’ve always thought the housing prices in North King and Snohomish Counties were grossly over-inflated in the last 10 years. I’m glad to see pricing that more accurately reflects where prices likely should have been all along.

Of course, the bad news is that folks who’ve bought more house than they could afford or who have to move for job reasons and what-not, likely won’t recoup what they paid. Will those people end up in foreclosure? I think a good number of them will and many already have. They won’t really have much other choice. And that’s incredibly sad.

These are the people the Fed should be helping. I mean, the government can back the purchase of Bear Stearns by JPMorgan Chase but it’s unwilling or unable for whatever reason to help the average homeowner? Isn’t the government supposed to help it’s citizens? (Don’t answer that – it’s rhetorical.)

This isn’t a political blog so I won’t get into that any further . . . So back to the topic at hand.

I don’t think the Seattle area will see the problems that have plagued Las Vegas, Phoenix and Florida over the past few years but the picture certainly isn’t as rosy as some would like to pretend. There are real problems and I don’t think we’ve seen the lowest end of it yet. I heard that foreclosure rates rose 60% in February – I think that’s low compared to what’s coming over the next 6 months.

Do you live in an area that has been hit hard by this? What are your thoughts?

If you live in the Greater Seattle area, what are your thoughts?

Feel free to post in the comments, but do please keep in civil and clean.

Thanks,

Annie

UPDATE 3.17.08 – 9pm PDT: Very interesting article on Huffington Post about the Bear Stearns bailout and foreclosure crisis. Rather eye-opening. Check it out.