From the AP:
Foreclosures May Jump As ARMs Reset
By J.W. ElphinstoneIn 2003, Anita Britten refinanced her two-story brick cottage in Lithonia, Ga. using a hybrid adjustable rate mortgage, or ARM. Her lender reassured her that she could refinance out of the riskier loan into a traditional one when her interest rate started to reset.
Three years later, Britten can’t get a new mortgage and her monthly payment has jumped by a third in six months. She can’t afford her payments and may face foreclosure if her financial situation doesn’t change.
As more ARMs adjust upward and housing prices begin to dip, many Americans like Britten can’t refinance and are finding themselves trapped in too-high monthly payments. For those who can’t make their payments, foreclosure is the only way out.
…
For example, Britten’s monthly payment jumped from $1,079 to $1,340 at the beginning of this year. It rose again on June 1 by another $104 and is scheduled to increase again in December. Britten, who is also paying off student loans, went to a credit counseling service to help her avoid foreclosure.
…
“ARMs are a ticking time bomb,” said Brad Geisen, president and chief executive of property tracker Foreclosure.com. “Through 2006 and 2007, I’m pretty sure we’ll see a high volume of foreclosures.”
…
In 2002, Christopher Jones, 32, refinanced into a hybrid ARM with plans to refinance again when the rate started to readjust. At the time, his downtown Atlanta house appraised for $108,000.Now, his monthly payments have shot up, but Jones can’t sell his house for more than $84,000 and he can’t get an appraisal for more than $85,000.
The appraisal firm told Jones that the value of houses in his neighborhood have fallen victim to a cooling market. With no other options left, Jones has decided to pack it in and foreclose on the house.
“I’m just going to take the loss,” he said. “That’s all I can do.”
…
Unfortunately, during a runaway market, many buyers, sellers and mortgage brokers were more excited about making deals than making smart deals, and the fallout has just begun.
It’s payback time for the buyers who thought they can get something for nothing in life… ouch!
coming soon to a town near you. very scary.
http://www.denverpost.com/news/ci_3950960
going to look at a house just back on the market recently. the would-be buyers couldn’t get financing. this should tell you how precarious some people’s situation is when a dual income no kid family can’t get financing in today’s fog a mirror and you’re approved culture.
this is going to get ugly folks. another 24 months and blood will be flowing in the streets for sure.
Richard, that Denver Post article is like a scary novel.
When I discuss suicide mortgages and bad financial decisions, it doesn’t seem real yet until I read articles like this.
Who ends up paying for all of this?
Pat
And they are only talking about ARM’s what about the IO resets.
this cant happen in new jersey.
different demographics.
Much more of an intelect here.
More stable.
richard,
“We could well see another spike in foreclosures,” he said. “It’s nowhere near over.”
Nice mashup on the article page. Holy crap that is lot of houses foreclosed on.
Too a look at sheriff sales Lots from Mendham Chatham and Chester.
Who said the so called rich don’t go bust.
A TSUNAMI OF FORECLOSURES
& BANKRUPTCIES GOING TO HIT VERY VERY SOON!
BOOOOOOYAAAAAAAAAAA
BOOOOOOYcott Houses!
Bob
Bob did not force or talk these idiots into buying at the peak and paying more than they can afford.
Blame the buyer and/or the RE industry for spinning the news.
DO NOT SIGN UP FOR MONTHLY SLAVERY.
McMANSIONS WILL BE GETTING HARDER TO SELL EVEN AT LOWERED PRICES!
BOOOOOOOYcott Houses!
NO MAAS TO RIPOFF OVERINFLATED HOUSE PRICES
Bob
Everyone.. hold your breath and relax. It’s different this time.
Really.
(note sarcasm)
-Richie
there are more people than you think who are in over their heads who bought houses in the top towns like summit, chatham and westfield. make no mistake, i’m seeing more people drop out of contract due to not being able to get financing. think how many people are in right now whereas on the outside everything looks peachy but on their balance sheets it’s a different story?
There are people in over their heads in every town, from Irvington and Camden on up to Summit and Chatham. It’s gonna be ugly when this all shakes out.
I thought buyers were not getting their financing lately because lenders have been trying to “behave a little” while HUD, et. al. are reviewing their lending practices?
Pat
Who ends up paying for all of this?
Pat
look in the mirror – if you follow the impact through the system it will get you either through the government or private enterprise
Westfield, Never.
Is it time to begin to scope property in bergen, or is it
to early.
I like River edge, Harrington Park,
Park Ridge..Prices seem so high.
I don’t see them breaking down.
I looked in Northvale, but did not like the town..
“Much more of an intelect here.”
Ha. But no spelling bee winners apparently.
LOL, NJGAL.
Anon 3:19pm “Westfield, Never.”
You must be a young pup or worse a naive old dog. ALL the “proper” towns get whacked when Wall Street gets whacked…mbs/home builder game is over…follow the money flows…westfield, ridgewood, summit, short hills, englewood, alpine ALL will get crushed…as the 30 something whiz kids find they are not wizards after all. All of those towns were in the dumps in 94′
I meant anon 3:05pm
in westfield i just heard of a potential buyer not being able to get financing. i’ve heard 2 other stories within the past month, all in westfield. getting in over your head isn’t confined to lower priced towns, just income level.
I’ve noticed a lot more comments on Realtor.com to the effect “please, only show to pre-approved buyers”.
Maybe the lenders are starting to tighten up, finally?
Maybe 3:05 was being sarcastic.
Pat
doesn’t take much to set off this anti real estate mob ;)
I wish agent “Your wife will ADORE you!” would show up.
I need to ask her for some advice.
Not really. I just feel like slamming every “professional” agent who put some poor schmuck into a house they couldn’t afford over the last couple of years.
I know, I know, Chicago and Bob, the schmucks have only themselves to blame, right?
But I can’t help feeling that somebody’s not doing their job and I don’t wanna pick up the tab.
Pat
River Edge is nice, but taes are very high andgoing higher,town reassessed alst year, and it caused a mighty uproar. (shell shock)
Also In Sept 0f 05 voters approved a massive expansion to the elementary schools 15+ new class romms music room etc. The state is supposed to contribute 4 million to the 20+ million price tag, that was last Sept.
Cannot possibly see how the state will come up with money now, since the Schools Construction Corp is bankrupt, not to mention the state.
They just strted paying for an addition completed 4 years ago, and will start paying for the high school addition which is already under construction.
Not to mention 15+ classrooms will require teachers, and teachers aides and all the rest.
Taxes are going to continue to get ugly as the town has almost no commercial rateables.
I think you woul dbe better off in Park Ridge.
Alos inventory in River Edge is just sitting, andhas more then doubled in about a month, alocal realtor tells me the market there is dead, but sellers are in denial.
does anyone feel like we’re looking down the barrel of the S&L Crisis Part II?
Westfield,Ridgewood,Alpine,
Never, and I’m not stupid or
an old fart.
And I’ve got deep,deep, pockets
to buy in this market.
So,, how is Hillsdale?
I hear its great and on the train
route.
Skeptic,
I’ve been think it and saying it for months (years?). Only the new BK laws are going to make it ugly for people to walk away.
Skep-tic, some analysts still say that without the loose money policies after the tech stock crash we would be even worse off. They say the housing crash in a couple of metropolitan areas is a fair trade for economic recovery.
I’m wondering about the exact timing of the new bankruptcy laws.
Why last year, and when was the date decided on?
Pat
About 18 months ago I lost a condo to someone who was offering 10K more than the asking price and 15K more than I was offering. These people had nothing to put down in cash and in fact also had to include their closing costs in the mortgage. Needless to say, the seller came back to me a month later because they were having a “hard time” getting a mortgage. I on the other hand had about 30-40% cash to put down and pre-approval. At that point it was too late and the seller couldn’t get out of the deal anyway. Weichert (the buyer’s agent) helped them get a “creative” mortage through their financing division. The greedy seller made out OK….don’t want to think about what’s around the corner for this buyer.
Here’s another: I know a couple who are purchasing a 430K condo in Hoboken and the builder is helping them get 100% financing. They were also told not to they “could work something out” regarding mortgage insurance.
Scary, really scary. I do know there are a lot of these stories out there.
DO NOT BID OR BUY A HOUSE NOW.
THE PRICING COOOOOLAPSE HAS STARTED!
DO NOT GET SUCKED IN TO BUY AN INFLATED MCMANSION THAT WILL BLEED YOU DRY JUST WITH THE UTILITY AND TAXES!
MORE TO LIFE THAN JUST WORKING AND PAYING BILLS
BOOOOOOOOOOYcott Houses!
Bob
Scary, really scary. I do know there are a lot of these stories out there.
6/19/2006 04:25:24 PM
These “Fool” buyers deserve the punishment they are about to be handed. Just to get in and in the process signing up for monthly MTG slavery.
WOW what a deal!!!!!!!!!
NOT!
No Bids No buying NO NOTT”””ING!
Bob
Question:
As many have discussed above, it’s increasingly common to hear stories about a potential buyer making an offer only to not qualify for the mortgage. At this stage of the qualification process, is it based purely on income and how much you can afford? Or, does the lender require an appraisal? In other words, how many of these deals are killed because the seller finds a “greater fool”, but the appraisal doesn’t come in high enough and the buyer can’t get the loan? Are appraisers being less generous in inflating prices than they were being 6 months ago?
Just to get in and in the process signing up for monthly MTG slavery.
WOW what a deal!!!!!!!!!
Bob
Forget about being a slave to a mortgage…what about when your house value falls below the mortgage value.
Being a Homeowner I WOULD NOT PAY THESE RIPOFF PRICES!
BABABABABABABABA
BOOOOOOOOOOYCOTT HOUSES!
Bob
News Flash:
Verizon sues Vonage.
Vonage down over $1 today.
Stock has lost half its value in
couple of weeks.
Housing might take a hit on this,
but most of the backoffice is in
India.
Oh Well,, Vonage a Holmdel Company.
Nice Area..
Many homeowners are relying on fools in bailing them out for retirement.
don’t be their sugar daddy!
Use a little common sense and know ALL EXPENSES like utilties cost taxes insurance and remmeber these ONLY go up over time.
COOOOOOOOLAPSE!
Bob
BOOOOOYcott Houses!
I would do Montvale or River Vale before Hillsdale. Montavle has corporate parks taxes are better there ahtne other areas.
The truly frightening thing here is how many new and old homeowners have maxed themselves out thinking that there will always be equity (and at the end of the day, a fat profit for them to take into retirement when they sell and move to a smaller place, or move south).
We are looking at a new disinfranchised class here – and I for one am a bit frightened of how things might look in the future — one thing we’ve also seen before, besides recessions and housing drops, is neighborhood blight – don’t think it can’t happen here..
I think this article forgot to mention
Interest ONLY payment.
Which is another disaster in combination with ARM.
IO & ARM with no money down.
time to pay the piper.
Anon 4:18pm…then you are a “recreational” drug user.
Go buy some houses.
One thing I just don’t understand is why anyone, including Booya Bob would care that someone else is overpaying for a house?
I see the coming debacle as my opportunity. They are setting the table, for my meals.
opportunity is one thing
recession bordering depression causes social ills
crime up, lots of suffering
So far only ARMs and IOs have been mentioned. I wish that were the only problem – how about the mass of negams being issued now?
InvestorDavid @ 5:33
i think the report considers Interest only loans as a subset of ARM loans.
Anon 4:30-
Yes. sellers are having a harder time now getting their price because it does not appraise out correctly.
I had a very interesting conversation with a local banker about this just a couple weeks back.
They are now having to check and re-check the most recent comps (like one week) to make sure everything is worth it.
If it’s happening out here, it’s probably happening in NJ, and maybe EVERYWHERE.
If
Maybe these buyers should have put more money aside each month instead of blowing it on such stupid crap like — Diesel & Seven Jeans, $40,000 SUVS, Dinner out every night, and ‘Starbucks & Whole Food’s.
People think that on a $80,000 or $100,000 a year salary they can live a ‘Sex in the City’ or MTV lifestyle.
But the amazing & scary thing is that people continue to shop only now its back to credit cards.
{{{For example, Britten’s monthly payment jumped from $1,079 to $1,340 at the beginning of this year. It rose again on June 1 by another $104 and is scheduled to increase again in December. Britten, who is also paying off student loans, went to a credit counseling service to help her avoid foreclosure.}}}
Never ever hear about people getting second jobs, or trying to get a higher paying job in their field to make the extra payment.
Never ever do I hear about people cutting back. They still can spend $2,000 a month on clothes from Bloomingdales & Nordstroms and visit Starbucks several times a day.
No, credit counseling, more credit, ‘repackaged credit’ is the LAST THING they need. They need to take responsibility and either start earning more to make their payments or sell their home if they can’t afford it.
Anonymous said…
Maybe these buyers should have put more money aside each month instead of blowing it on such stupid crap like — Diesel & Seven Jeans, $40,000 SUVS, Dinner out every night, and ‘Starbucks & Whole Food’s.
People think that on a $80,000 or $100,000 a year salary they can live a ‘Sex in the City’ or MTV lifestyle.
But the amazing & scary thing is that people continue to shop only now its back to credit cards.
6/19/2006 09:26:41 PM
To quote Carol Ann – they’re here :(.
Enough!
More sad stories:
http://tinyurl.com/hht3v
http://tinyurl.com/gopq6
http://tinyurl.com/mf2ce
http://tinyurl.com/qq7gm
Oh, hang on! Wait a sec …
O.K. I went and put my $300 jeans on.
Don’t be jealous, now, Chicago.
TICK TOCK TICK TOCK
the coooollapse has started!
Babababababa
BOOOOOOOOOOOYcott Ripoff Home Prices!
Bob
“Enough!”
Damn, you beat me to it.
Yeah, River Edge is such a great town. 10k a year taxes for a 3 br ranch on a busy street by route 4, oh yeah..so worth it!
oh and the basement floods
minutesfrom nyc: That is why I suggested Park Ridge, but my personal favorites would be Allendale or Wyckoff. River Edge taxes are out of control, and the residents are asleep, and of course as you say the traffic from Rt 4, and all the excess that comes form being so close to Paramus.
Forget about being a slave to a mortgage…what about when your house value falls below the mortgage value.
Then you become the Banker’s Bitch.
I like Harrington Park, Old Tappan, Rivervale or Montvale not sure about Hilldale..
what about these Bergen county
hoties:
Wallington,N.Arlington
OT & HP are very nice, but taxes ar on the higher side. Montvale is nice, as is River Vale, although RV has a north south divide, northern section newer bigger homes, and the kids in RV depending where they live go to two differernt HS’s although both schools are part of the same system.
I am not a real fan of Hillsdale, some flooding issues dumpy town center as well as other issues etc.
No Arlington & Wallington, just say no.
And Lyndhurst, and Elmwood Park
And Farview
Hah!
That’s great.
Really lifted my spirits.
Pat
Hey Chicago, easy there…
Some of us make a living selling $300 pairs of jeans to those that want them!
Olive:
Little story from about 15 years ago. I was traveling in Greece [Santorini to be exact], and I went into a restaurant to order food. The waiter starts speaking to me in Greek, and I shake my head and said in English, “I don’t speak Greek”.
“You, you no speak Greek, but you are Greek?”
“No, I am not Greek”
“You no Greek, you look Greek.”
“I am from the United States.”
“Oh, I understand. What part of Astoria do you live in?”
Funny story, Chicago.
I’ve lived here since ’99. It is such a fantastic neighborhood. Safe, great restaurants, and reasonable rent. We are able to save $$$ towards our down payment while watching the bubble burst.
The wife and I are leaving for Jersey (Maplewood, most likely) at some point. I will miss this place though. It has been a fantastic place to live.
Hi
I came across your site a few days ago and seems to be very helpful. I have been using the various sites to assess the price that a home/apt was bought but two other things that interested me and would appreciate if you could share some light on them
1. Why do you think now is the worst time to buy a home? what are some of the down side. I was thinking that since the market is on the way down (and ofcourse no one can judge where and when the lowest point is), it would be a good way to “command” the price or as you say lowball.?
2. You also mentioned somewhere that twice the inflation rate (max) should be price that one should pay for a house that was bought x years ago and not anything more. Well i am looking in Hoboken and there if i were to go by that there is no place to find one. My calculation has been.
A. Find out the Price that the apt was bought for in whatever year
B. Add the tax every year + whatever maintenance he has paid+ his 10% down (at say 5% growth every year). Add all this to inflation rate twice of the list price of the house – and that should give the price of the apt.
It could potentially be a bit up or down depending on how hot the market (in terms of location – proximity to NYC etc).
thoughts?