Rise in foreclosures "a shock." Really?!?!
You've got to love this headline:
Rise in foreclosures 'a shock'
Really?!?! How can you be shocked that the number of home foreclosures is rising? Despite legislative efforts to slow them, the number of home foreclosures rose 10% month-over-month and 30% year-over-year in February. It would be a heck of a lot worse if they government wasn't doing its darndest to keep people in homes that they can't afford.
While the headline from this article is a joke, the following quote is spot on:
The reason so many people lose their homes once they are in default is partially attributed to the severe home price drops recorded in many of the worst-hit areas. When borrowers are severely underwater, owing more than their homes are worth, it removes an incentive to keep up with mortgage payments. Some simply walk away.
One big reason that foreclosures are up is because many people have to move to get a new job and their homes are underwater. Would you pay money out of your own pocket so to sell your house to someone else? I certainly wouldn't unless I was barely under water and I really needed to preserve my credit rating for some reason.
The government is going to be unable to prevent home prices from falling to an affordable level. They had gotten way out of whack with all traditional measures of affordability. They may be able to slow the decline in prices down by passing policies that are unfair to responsible citizens, but make no mistake about it prices are going to eventually fall regardless of the action that Uncle Sam takes. The economy will not stabilize until home prices do.
By the way, I hope that the government claws back every penny of the bonuses that that scumbag Thain and his friends over at Merrill paid themselves early. This sort of stuff is infuriating: Merrill postponed posting losses until after cutting $3.62 billion in bonuses, NY Attorney General says. I'm not for capping executive pay, but I am for bringing the hammer down on these guys.