Mortgage Loan Assistance Plans Fail, Foreclosures Climb 65%, Bank Seizures Double, And Now A Whole CITY Has Gone Bankrupt? I’m Feeling Pessimistic

May 14th, 2008 | by Ginnie | (Visited 16,606 times)

Welcome to 2008.

Arizona and a few other states were recently declared to officially be in a recession. Candidates for presidency have been touting loan assistance programs to help people stay in houses they can’t afford for even longer – just on our your dime this time instead of theirs. Hell, even an entire US City has filed for bankruptcy.

I’m feeling pessimistic.

Making the rounds, I found these blurbs to pretty much sum up the financial status of the country. Sometimes it feels good to be “throwing money away on rent”. Especially as I almost took the dive on a “great offer” last year before deciding to rent it first for a year. Looking at this news, I have to say I’d rather be throwing money away on renting than throwing money away on buying.

U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short.

More than 243,300 properties were in some stage of foreclosure, the highest monthly total since RealtyTrac Inc., a seller of default data, began in January 2005. One in every 519 households received a filing and Nevada, California and Florida had the highest rates. Filings rose 4 percent from March.

The worst housing slump since the Great Depression may push the U.S. economy into a recession. Falling home prices, which dropped the most in 29 years in the first quarter, are making it tougher for homeowners to refinance, and voluntary programs to change loan terms for at-risk borrowers haven’t helped enough people, said Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington.

“Loan modification isn’t working,” Rheingold said. “It’s extremely difficult for a homeowner to talk to a servicer and even if they do, it’s hard to get the servicer to change the terms. You get voice-mail hell, they don’t return calls, you can’t get a live person on the phone.”

There was a lot of buzz about loan modification and there still is a lot of talk about helping homeowners and subsidizing failing lending companies, but I really hope none of it comes to pass. Part of the American spirit is being able to fail. Sure, there is a Microsoft every now and then who succeeds by the skin of their teeth, but for everyone of them, there are thousands of other companies who never left the tarmac.

Call me a jerk, but I’ve personally been through a major debt and credit problem when I decided to switch careers without any savings. Jumping out of the plane without a parachute is not too fun. It’s a great learning experience though. I came out three times better than I went into it and I feel I’ve obtained decades of life experience in only a few short years.

But the first part of all of this is accepting the loss. Losing your home, losing your good credit, losing your possessions, whatever. If you enable people with credit card debt and bad spending habits, you only prolong the inevitable.

The First Bankrupt City

This was just funny. Ok it’s “bad funny”, but still funny. I’ve never heard of an entire city filing for bankruptcy..

The Californian city of Vallejo, population 117,000, has filed for bankruptcy. A city has never filed for bankruptcy before in the US. Vallejo’s tax income has been shattered by a 26% fall in house prices. There are other cities on the brink in California. They’re lining up to file.

You can preach “Change” and “Hope” all day long.. but with the layoffs, foreclosures, and housing declines I read about each day on my RSS feeds – I’d much prefer something with more substance. Less talk, more numbers.

Another day, another dollar, I guess. It would just be really cool if I got to keep that dollar this time.

Tags: tragic, funny, bankruptcy, layoff, debt