How is This a "National" Crisis?
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The latest data on the mortgage and housing situation:
Similarly, do we really need a remedial course in arithmetic? If 10% of homeowners with a mortgage "face a problem with their mortgage," then by definition 90% do not.
And of course, not every mortgage "problem" (i.e., foreclosure, late payments or missed payments) maps to a unique homeowner problem: speculators — sometimes with 5, 10 or 15 properties — surely explain some if not many of these occurrences (the report, by the Mortgage Bankers Association, is based on all residential mortgages, including by speculators financing multiple properties). By the same token, many of these loans represent just-completed or even unfinished properties in new housing developments (i.e., no one has ever lived in them and no one is being forced out of them).
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Which leads to the other rarely-discussed fact about the "crisis" —
The mindset has been, and continues to be, "build first, sell later." Of course there is a housing collapse there: Why would anyone buy a "used" house when they're still building brand new ones on the other side of the development for basically the same price?
(And, to make matters worse, why buy a foreclosed property that you are prohibited, by law, from entering and inspecting? It's bizarre: you literally have to bid on the property sight unseen. But that's how it works in Nevada, or at least where my parents live.)
At least four houses on my parents' street have foreclosure notices taped to the garage door. Not a single one was ever occupied (at least not by owners — some were briefly rented). No Mother Peep, no Silas Barnaby, no evil conspiracies, certainly no "predatory" lending. Just gamblers who lost — a phenomenon not unusual in Nevada.
Speaking of my parents: What do Nevada, Florida and Arizona have in common? That's right: They are retirement destinations; my parents are a prime (no pun intended) example. Who really believes that legions of middle-class (or wealthier) retirees are selling their homes and setting up shop in a new state — armed with their sold-house proceeds, their pensions, their IRAs and their Social Security checks — and then blowing it all on a subprime mortgage? Of course that's not what's happening. The people who had the common sense and the modesty to simply buy one house and live in it are not the ones caught up in all this.
So I ask again: How do 5% of mortgage-encumbered owner-residents (again, not mere "homeowners"), mostly speculators, in four states constitute a "national" crisis?
Nearly 1 in 10 American homeowners with a mortgage faced foreclosure or fell behind in their payments in the first three months of the year, according to a report released Thursday, a figure that offers a look into the toll caused by the collapse of the housing market.Of course, this means that the Times' headline — "Nearly 1 in 10 American Homeowners Face Problems With Loans" — is flat-out wrong: Do we really need a remedial course in the difference between "homeowners" and "homeowners with a mortgage"?
Similarly, do we really need a remedial course in arithmetic? If 10% of homeowners with a mortgage "face a problem with their mortgage," then by definition 90% do not.
And of course, not every mortgage "problem" (i.e., foreclosure, late payments or missed payments) maps to a unique homeowner problem: speculators — sometimes with 5, 10 or 15 properties — surely explain some if not many of these occurrences (the report, by the Mortgage Bankers Association, is based on all residential mortgages, including by speculators financing multiple properties). By the same token, many of these loans represent just-completed or even unfinished properties in new housing developments (i.e., no one has ever lived in them and no one is being forced out of them).
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Which leads to the other rarely-discussed fact about the "crisis" —
Four states — Arizona, California, Florida and Nevada — accounted for about 89 percent of the foreclosures, a disproportionately high amount of the newly reported figures.I have seen first-hand the situation in the Las Vegas suburbs, where my parents now reside in a new-build community (with no mortgage, incidentally).
The mindset has been, and continues to be, "build first, sell later." Of course there is a housing collapse there: Why would anyone buy a "used" house when they're still building brand new ones on the other side of the development for basically the same price?
(And, to make matters worse, why buy a foreclosed property that you are prohibited, by law, from entering and inspecting? It's bizarre: you literally have to bid on the property sight unseen. But that's how it works in Nevada, or at least where my parents live.)
At least four houses on my parents' street have foreclosure notices taped to the garage door. Not a single one was ever occupied (at least not by owners — some were briefly rented). No Mother Peep, no Silas Barnaby, no evil conspiracies, certainly no "predatory" lending. Just gamblers who lost — a phenomenon not unusual in Nevada.
Speaking of my parents: What do Nevada, Florida and Arizona have in common? That's right: They are retirement destinations; my parents are a prime (no pun intended) example. Who really believes that legions of middle-class (or wealthier) retirees are selling their homes and setting up shop in a new state — armed with their sold-house proceeds, their pensions, their IRAs and their Social Security checks — and then blowing it all on a subprime mortgage? Of course that's not what's happening. The people who had the common sense and the modesty to simply buy one house and live in it are not the ones caught up in all this.
So I ask again: How do 5% of mortgage-encumbered owner-residents (again, not mere "homeowners"), mostly speculators, in four states constitute a "national" crisis?
Posted by Kip on
6 June 2008
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