House of Cards: The Faces Behind Foreclosures

[one...two...tree 2,762]

Zachery, a firefighter, was injured in an on-duty accident in 2007. Disabled and battling a weak economy, he had to liquidate his fledgling demolition business. Bills from the failed business deepened his debts.

By David Von Drehle, Time

Jeff Wagoner is a bankruptcy attorney in Kansas City, Mo., with the brush-cut hair and clear eyes of a former Navy aviator. From his office in a tower on a hill, he can see miles of prairie and a world of hurt. Wagoner's clients (and he has plenty these days) range from folks who had no business ever buying a house to folks freshly fired from executive suites. Based on his survey of the economic wreckage, Wagoner's conclusion is that even the slightest miscalculation or change in circumstances could send another customer through his door: "There are not a lot of second chances out there right now."

We have entered the one-strike-and-you're-out era. One lost job. One medical emergency. One bad risk or misjudgment of the heart. "I've seen more people lose their houses in the past year than in the previous nine years put together," Wagoner said one recent afternoon, as gray skies hung low over the vast horizon. "It sounds crazy," he continued, "but I'd say unless you're making over $350,000 a year, the more you're paid, the more vulnerable you are. If you lose a job, you're going to have a hard time finding another that pays as much. Or maybe you need to move to find that new job, but you're stuck with a house you can't sell. Or maybe your marriage breaks up, and you have to liquidate your assets at today's prices." (Special Report: "25 People to Blame for the Financial Crisis")

In the one-strike economy, it's not just the subprime suckers going down. Trouble stretches beyond the province of liar loans, condo-flipping and the collateralized debt obligations that no one fully understands. A hard rain now falls on the just as well as the unjust. Consumers have stopped spending, factories have stopped operating, employers have stopped hiring — and home values continue to fall. For millions of people, the margin between getting by and getting buried is becoming as thin and as bloody as a razor blade.

The number of homeowners headed toward foreclosure is rising so quickly that "you need somebody to project what the projections will be — because they're just changing so fast," said Lindley Higgins, the applied-research manager at NeighborWorks America, an urban revitalization project created by Congress. A decade ago, Higgins said, 400,000 foreclosures nationwide was a busy year. America may see 2.5 million in 2009.

"The other day," Wagoner says, "I had a visit from a corporate executive who moved to town and bought a house." Which should be fine; a big wheel need not fear a big mortgage. But this guy's one strike was moving from Florida, where the real estate market is so screwed up that judges in one county are hearing nearly 1,000 foreclosure cases a day. Mr. Exec was stuck with his old house too, and that one was dragging him down, down — until there was nothing left to do but pay a visit to the bankruptcy attorney. " I would bet a majority of people are only a few paychecks away from being in this office," says Brent Westbrook, a partner in Wagoner's firm.

President Barack Obama described this stark reality in his recent speech rolling out an expensive plan to keep the housing market from sinking further. Picture "a young family," he suggested. "They save up. They search. They choose a home that feels like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, make a down payment, and make their mortgage payments each month. They are as responsible as anyone could ask them to be." (Read: "Will President Obama's New Housing Plan Work?")

Then one thing goes wrong. "Perhaps someone loses a job in the latest round of layoffs, one of more than 3.5 million jobs lost since this recession began," Obama said. "Or maybe a child gets sick, or a spouse has his or her hours cut. In the past, if you found yourself in a situation like this, you could have sold your home and bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower rate. But today home values have fallen so sharply that even if you make a large down payment, the current value of your mortgage may still be higher than the current value of your house. So no bank will return your calls, and no sale will return your investment. You can't afford to leave, and you can't afford to stay."

This is a harrowing experience, tightrope walking over the financial abyss. American Dreamers are optimistic, but few can tread that wire now without looking down in panic. We're geared to believe that risk begets reward and our tomorrows are brighter than our todays. One-strike-and-you're-out is a neck-snapping reversal for a culture accustomed to assuming that fate is a welcome friend.

more...

http://www.time.com/time/business/article/...1881854,00.html

[Ban Hammer 13,355]

good article

[alienlovechild 75]

Then one thing goes wrong. "Perhaps someone loses a job in the latest round of layoffs, one of more than 3.5 million jobs lost since this recession began," Obama said. "Or maybe a child gets sick, or a spouse has his or her hours cut. In the past, if you found yourself in a situation like this, you could have sold your home and bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower rate. But today home values have fallen so sharply that even if you make a large down payment, the current value of your mortgage may still be higher than the current value of your house. So no bank will return your calls, and no sale will return your investment. You can't afford to leave, and you can't afford to stay."

If the mortgage is higher than the value of home, then the home isn't worth much on the current market. Some buyers made a bad deal and now want somebody else to pay for their poor judgment. I lost plenty on my long-term investments like a lot people but there's no bailout. Housing prices are still too high and they need to get back to the pre-bubble stage.

A house it's isn't an investment that always goes up, it's a home but too many people learned that lesson the hard way.

[justashooter 430]

some of us could handle 4 or 5 strikes before we're out. that's because some of us are conservative, and take care of business.

everybody who gets laid off these days is gonna get 9 months unemployment pay. that's a start.

trouble is, that's all most people have, other than some old furniture, a car loan, and a CD collection.

some of us have 50,000$ worth of liquidatable assets in our hobby. some of us are sitting on big piles of cash. some of us have cars and trucks we don't have payments on. some of us have mortgages less than 25% of our income, because we weren't stoopid enough to set ourselves up like that.

stoopid is as stoopid does. natural selection weeds out those who cannot survive. too bad liberal government is going to keep them alive on my tax dollars.

so where's my bailout?

Edited February 26, 2009 by justashooter

[tmma 467]

.....

A house it's isn't an investment that always goes up, it's a home but too many people learned that lesson the hard way.

.....and we are all going to be paying for it one way or another.

[Jasman0717 9]

I have no idea what I would do if I got laid off

[Ban Hammer 13,355]

I have no idea what I would do if I got laid off

play more golf