Mortgage Confidential: Mortgage Resets Aren't to Blame
In a story released today by the Associated Press, RealtyTrac, an online foreclosure reporting firm, reported that year over year foreclosure rates jumped 57% when compared to March 2007. It seems foreclosures just won't stop and it's the fault of all those subprime and alternative mortgages that are resetting to higher rates and people simply can't afford them. Oh really? In another slant on the very same data, CNBC reported that yes, foreclosures are still up nationally, but they actually are FALLING in other states such as Texas, New Mexico, New Jersey, Hawaii and Delaware. This little tidbit, oddly enough, was stuck in the very last paragraph of the article. But wait a minute...if all these loans that are adjusting at higher rates are causing more and more people to be foreclosed upon then why are these other states immune from the very same problem? Hmmmmm?
Could it be that it's not the loan type that's been the problem? After all, subprime loans have been around for twenty years and so have their hybrid brethren so why has this foreclosure "crisis" being blamed upon subprime loans and the brokers that pushed them?
I've suggested this for quite some time, that if it were the type of loan that were the problem then we would have seen similar foreclosure rates for the past twenty years, and we haven't. And now we see that other states, including Texas, are showing just as dramatic decreases in foreclosure filings, all with the very same loan types as depressed states like California, Nevada and Florida.
The foreclosure "crisis" was caused by buyers who wanted in on the real estate boom, all the while thinking that if they ever couldn't afford the payments they could always sell and turn a profit. After all, home prices were going up so quickly they just couldn't lose. Could they?
Oh, and I almost forgot. Both the House and Senate are getting ready to throw hundreds of billions of dollars at the problem ignoring this recent data. Hundreds of billions of dollars of our money, may I remind you.