A lot of times in economic cycles the "experts" are asked at least in a limited rear view mirror time window to acknowledge we have hit a bottom and are on the upswing again to brighter days, to a recovery. I am here to ponder another reason
Why The Mortgage Crisis May Still Get Worse.
It is an ongoing soap opera with real lives involved. Bailouts of banks, job losses adding pressure to homeowners making payments, many years of lax lending and easy credit, the most recent a moratorium on foreclosure proceedings.
The "latest" wrinkle in the soap opera which has probably been an undercurrent the last two years or so which will open the door if not the "floodgates" to more foreclosures is
STRATEGICALLY NOT MAKING YOUR HOUSE PAYMENTS !!!
It used to be between bank and borrower, between even in the job market employer and employee, YOUR WORD IS YOUR BOND. It was an old fashioned thing called trust. In the job market it went away in the 1990's with outsourcing and offshoring of all sorts of jobs, with the fat cats at the top making more and more money.
With the housing market it all centers on crashing values. Homeowners in south Florida for example in the condo market would buy a luxury condo and then two years later their market value of their condo had been slashed 50, 60, and sometimes 70%. So there you have the homeowner, who WANTS to be responsible owning say a $400,000 condo that he can now sell for $200,000. Luckily we will say he still has his job. But his home now is his prison without taking a HUGE BATH hit financially to get out of there. The two fold PUSH to do something is he feels not only is he upside down in his value but he sees the huge executive bonuses these fat cat bankers get with bail out money so he feels there is NO TRUST anymore and secondly it is time to move in life. People do not stay in one location FOREVER.
What does the owner do? He STRATEGICALLY tells the lender he is NOT going to make his payments anymore. Sounds ridiculous right, for an upstanding citizen? NOW we have a CRISIS OF ETHICS. If you can't beat them join them. It is a race to the bottom. All this GREED around you can't fight it anymore. You are literally drowning in a sea of greed. NOBODY it seems cares about the little guy. The homeowner tried loan modification. No deal and often too tough to obtain.
Will we become a nation of renters? The percentage of renters in society is increasing. It is an impact of people being thrown out of houses that they formerly owned and actually want to still own but no solution for them is in sight.
So the mortgage crisis unless the job market picks up strongly soon is apt to GET WORSE due to FINANCIAL decisions of people actually paying their bills on time today. Please come and take my house away. MORE FORECLOSURES! Is that radical or what? You have to say the world has definitely changed. But it will be a vicious cycle too as the banks offering new loans will raise interest rates to cover the RISK of people strategically actually making this move, again making it harder to get into a house. Certainly not the right foot you want to get off to in acquring the AMERICAN DREAM. Or will it stay a NIGHTMARE for many for quite awhile? Apparently hurting the credit score rating doesn't bother too many people these days. It is more important to be free.
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