Re: Foreclosure in America is an industry
by
RonB52
09/21/2009, 12:30 PM #
Half of America is losing their homes.
This is significantly overstated. There are somewhat more than 100 million households in the United States. Let's call it 100 million. Even at the alarming rate of 300,000 homes going into foreclosure per month nationwide that we saw in late 2008, it would take 14 years before 50 million homes had gone into foreclosure. (Factoring out renters and "free and clear" owners would probably push the statistics closer, but not particularly close, to your "half.") This is not to say that things aren't bad. In Las Vegas, for example, I've seen estimates that more than half of all homes with mortgages are "under water" -- the mortgage balance exceeds the current estimated property value. But not all of those mortgages will go into default.
half of America needs 45%, 50% or more of their real household income to cover their mortgage
This, too, is overstated. From the University of Chicago: "From 1991 to 2007 the number of all households who were paying more than 50 percent of their monthly income for housing costs rose from 8.9 million to 18.5 million" In other words, it went from about 9% of all households, to about 18.5% of all households, in 17 years. It has probably gotten worse with the job losses over the past year, but nowhere have I seen a credible estimate that suggests it's as high as 50%.
every mortgage written in America has a clause that permits the bank to foreclose the property if the [borrower] is late on the first payment
Of course they do. Contracts are generally not like the game of horseshoes. Being "close" to performing your obligations doesn't count.
Why do you suppose home owners are termed "tenants" by mortgage and title documents?
To my knowledge, they simply aren't, and I've read over 100 mortgages as a law clerk for a trial judge ruling on mortgage foreclosures.
But you know how it is, the boss gives you a story to write by five o'clock, you hunt down the numbers, call some industry insiders for a couple quotes and whip off the story... it isn't vey often that they get assigned to spend weeks interviewing people in the actual foreclosure process
If this is how your newspaper reports on economic trends, you need to stop relying on the High School student newspaper. Out in the world, it's common for the economics and business reporters to work for days, weeks, or longer, on the kind of story you're describing. Here's one example, from JackDallas' favorite, the Miami Herald, that clearly took more than a day to research and discusses at some length why more mortgages have not been modified: <link>
Mortgage foreclosure is indeed an industry, and on the legal side of it, it employs some of the laziest, sloppies lawyers you'll ever meet. Of course, the industry attracts them with the exceptionally low fees the banks are willing to pay. The "industry" is heavily computerized. This starts with the banks and their cryptic computerized account histories. Few lawyers -- even foreclosure lawyers -- can decipher them, and even bank executives routinely ask for a moment to orient themselves to the gibberish before they answer questions. And those foreclosure law offices are little more than a few word processor templates and a staff of paralegals.
While there's no question that a statistic like "300,000 new foreclosures each month" is horrible, but the industry just isn't quite as large as you suggest. I think current estimates are that about 12 to 15 percent of existing mortgages are behind on their payments. That is consistent with the Obama administration's plan hoping to help as many as 9 million adjust their mortgage terms.
