Foreclosures Spread As Unemployment Rises

Posted by: Prashant Gopal on July 30, 2009

The foreclosure crisis has entered a new phase. It’s spreading beyond the wreckage of the housing bubble to metro areas in Oregon, Idaho, Utah, Arkansas, Illinois, and South Carolina where unemployment is rising, according to RealtyTrac’s Midyear 2009 Metropolitan Foreclosure Market Report released this morning.

California, Florida, Nevada, and Arizona continue to have the highest foreclosure rates in the nation. But some parts of Michigan, Ohio, Indiana, and California are seeing improvement, the report said. “While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases,” James J. Saccacio, chief executive officer of RealtyTrac said in a prepared statement. “As unemployment rates increase in different parts of the country, it’s very likely that we’ll see similar patterns develop elsewhere.”

Unfortunately, the loan modifications being encouraged by the Obama Administration are being severely outpaced by new foreclosure starts. This graphic from the Center For Responsible Lending tells the story. The blue line represents the number of modifications. The yellow bars indicate the loans that are more than 60-days delinquent, and the red bars represent foreclosure starts.
loanmodchart.jpg

Reader Comments

Joe Wilson

July 30, 2009 1:35 AM

Unfortunately, the American people in mass have gotten to the point that they have been dumbed down by the public school systems that somehow it has been a crime to be poor. When in fact in many places in this Commonwealth as well as Indiana where as many as 20 to 30 percent of the population is defined in poverty.

The real issue is that this has been foisted upon us by the mainstream media that somehow being poor is a crime. Somehow, its that people who work in service jobs are totally stupid and incapable of learning. Not my opinion but they have to create class warfare and have slaves to keep the system running. People who pull out of their system of taxation, confiscation, and poverty do the slave drivers no good.

The aggravating thing I find is that somehow we should blame the poor for their circumstances. No one else should be taking the heat for the lousy economy, job market, and society. The banks aren't responsible despite the fact they threw millions of Americans to take loans they could not pay for so the banks could make extra money at the expense and then reclaim the property a year or two later when the interest rates increased.

I have no doubt that the current economic mess is a conspiracy and the reason I say this is that its too well staged and too planned to just be a coincidence. People were encouraged to buy homes at inflated values at a time when domestic American industry and businesses were being outsourced. It looked great while everyone could afford to run on the treadmill. When the economy took the dump, the vultures swept in and reclaimed the homes and properties that they had loaned billions for.

The fact that every government both Democratic and Republican since the 1970s and 1980s has allowed the economic maelstrom of losing millions of family wage supporting jobs is the real atrocity. The subsequent loss of economic prowess has affected every community in this country including Louisville and every other city in Kentucky and America. Not to mention federal and state governments being in the hole.

All this talk about fixing these issues will be for naught until someone gets living wage jobs in this country. I am talking about the 15 to 25 dollar an hour type of jobs that pay mortgages, car payments, food, electric, clothing, health insurance,etc. To talk about these issues without bringing up these points is like going to the castle with Don Quixote and swinging for windmills. We have lost millions if not tens of millions of living wage jobs in the last 25 years under various free trade pacts that weaken our standard of living and our national culture. Not to mention the loss of these jobs because we require environmental impacts, social insurance, taxes, etc. Versus a plant going to Mexico, China, Vietnam or India where such taxes and social issues are not held in high esteem. Plus note that labor costs of going to these nations are 1/25th to 1/50th of the average American wage.

That explains why the average American is losing his job to a place in Communist Vietnam or China or India. When you have to pay an American citizen 12-25 an hour to do a job that you can get done for 2 dollars a day in most of the developing world, that is why we are losing. Our government does not care and it does not figure into policy decisions that millions of Americans are unemployed or underemployed. That is another issue. It sounds great that the economy has created 10 million new jobs but never do you hear what these jobs that are being created. Service jobs anyone? 9 dollar an hour jobs anyone? No security, no economic security, yet bankers and other assorted internationalist thieves have been getting billions and trillions of dollars of economic bailouts. So did you get that bailout other than unemployment which you are fortunate to get for 26-39 weeks. Did you get a golden parachute for losing the company money like many CEOs did? Or how about the types at a major employer in this city that pays its box flippers 8.50 an hour for part time work in the middle of the night. Meanwhile, they have to reorganize their lives under their new master's schedule.

I could go on and on but at this point I must happily run along as a wage slave working for the man. In some places, this letter would be considered treasonous. Like in a Communist nation.

Andreas

July 30, 2009 1:36 AM

what goes down, must go deeper

Shirley Billingsley

July 30, 2009 2:47 AM

I have tried to stress across the internet, and even in my book, Foreclosure, that this is not a good time to buy property, unless, you can pay cash up front; or get a very low interest rate low monthly payment, and have the prpperty paid off in just a few years, not long term payments. To locate my book on Foreclosures, go to Wordclay, and type in Shirley Billingsley

SLEZE

July 30, 2009 10:16 AM

@Joe Wilson - You deny the concept of self-accountability and support the concept of artificially inflating the pay of jobs that require no skill and no specialization which would lead to the hyperinflation that exists in Zimbabwe). Interesting - Perhaps you should read a little Ayn Rand.

You do go on and on and it is ironic that you bring up the potential "subversive" of your post. Perhaps in a communistic society it would be treasonous but we live in a free-speech society in which anyone is allowed to articulate their goofy perspectives with no danger of the government cracking down. So why bring it up? Unless you're living Iran...then I apologize.

Eric K.

July 30, 2009 11:25 AM

@SLEZE - Is that what you will say when your job gets outsourced? Many skilled jobs have gone overseas as well, did you know that. Maybe you are just to important seeing that you are the only one using all caps in your name.

Dietrich

July 30, 2009 12:41 PM

There is only one way to get out this mess. Replace the blindly pursued and criminally developed socio-economic model. Stop helping banksters by beating around the bush.

TimL

July 30, 2009 2:44 PM

Property values need to continue to decline. In Oregon they are still 5 to 1 house price vs median income. They need to get back to 3 - 3.5 to 1 for the average home. (1200 sqft 3 bed, 1-2 baths on 1/5 acre)

When they reach this point the people buying houses will be able to afford them.

Eric K.

July 30, 2009 3:21 PM

This country has been pro business for awhile now (I'm not against business). This is why unions are impossible to organize and the taxpayer has to bale every bankster that thinks he/she is smarter than everyone else out. The employer (us, taxpayer) has to work/be taxed like a dog while the employee (state and federal employees) reap all the benifits like pensions, health care, double/triple dipping and SS for life.

Lanai

July 30, 2009 9:19 PM

Get rid of the NWO who has caused this mess and continues to create havoc and poverty.
Yes, our schools are dumbed down, in FL they don't bother teaching much after 3rd due to the No Child Left Behind by NWO Bush. Out jobs keep being outsourced and US companies and policies reware companies that outsource and buy importers products.
OOsama want to nationalize healthcare, force our schoolchildren to have untested vaccines for the non-epidemic of the Swine Flu. In the 80's many volunteers who took the vaccine became paralyzed. This is all due to NWO.
If every American refused to the pay income taxes which IRS cannot provide documentation of the law that "proclaims" this. A stupid jury convicted Wesley Snipes of breaking a law by not filing for income tax although it is NOT against the law.
Stop Paying Income Tax. Our hard earned taxes go to the NWO and allow let to take more and more of our rights, freedoms, and dignity away.

Mike

July 31, 2009 4:05 PM

Lanai - You're ignorance is absolutely astounding (almost as atrocious as your grammar). The federal income tax authority traces its roots to the Civil War, but it is firmly rooted in the Sixteenth Amendment. You know, the 16th Amendment to that thing called the United States Constitution? People like Lanai ARE THE REASON jobs are being outsourced. If America wants to maintain any semblance of the global hegemony it enjoyed for the past half century we will need to educate the classes that previously relied on the manufacturing and services sectors so that they can find a foothold in the new global economy. Joe Wilson - I could say a lot about your post, but I think the only thing worth commenting on is that protectionism will not create jobs or wealth over the next one hundred years. Only a radical overhall of the educational system will do that, but amazingly our politicians cannot find the will to do it. America needs to focus on math and the sciences and continue to encourage widespread higher education. Lanai, here is your law that you accused the IRS of apparently being unaware of (you know, hidden in that long forgotten thing called the Constitution):

Amendment XVI
Passed by Congress July 2, 1909. Ratified February 3, 1913.
(Note: Article I, Section 9 of the Constitution was modified by
the 16th Amendment.)

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Joe

August 1, 2009 12:42 AM

Try to visualize, for a moment, what it would be like if there were 2.5 billion humans on Earth instead of 7 billion...

How many of the mega issues that permeate our lives these days would even exist?

What is the limit to the number of humans? How close are we? Prof. Dennis Meadows says we have already exceeded the limit and that all of our bandaids are not going to fix anything.

Have another beer, baby.

RRoss

August 1, 2009 4:07 PM

What is the purpose of government?

Tom Shepke (Federalsburg)

August 3, 2009 7:54 AM

I welcome this situation. To paraphrase Peter Schiff: this correction of house prices is not the problem. The bubble was the problem and now the natural process of deflating that bubble is what is needed. it is a good thing (Except for those that bought at the top). Houses are still too high for many people.

Numbers

August 3, 2009 11:04 AM

Joe Wilson,
I agree with you. My observation is over the years our wages have been rising at a faster level than any where else in the world. What has become now is the same employers are unable to maintain these wages and make their (big) profits. I saw so many major US companies in Asia and employing thousands of those citizens. My understanding is these employees are well educated and work for less than 25% of our wages. Many companies are expanding and news papers are full of employment ads. Our work force needs to be competitive and at the same time our cost of living (housing, health care, utilities, local taxes, insurance etc.) does need to come down for us to survive with lower wages. If not we will have to wait till Asian wages come up so that we can be competitive. Bottom line: we have become victims of our own success.

Fionad

August 3, 2009 6:23 PM

More than the housing market needed a correction. As an employer who has had to put up with lazy employees with a horrible work ethic here in Arizona this correction as painful as it is is absolutely necessary. People have had it too good for too long. Mediocre and lazy people have been guaranteed a high salary but not anymore. Its a buyers and an employers market and many people living off the fat of the hog two years ago are in this economy unemployable.

William

August 4, 2009 12:44 AM

Joe Wilson.

Very well said. Erosion is the heart of the problem. The financial mess and other problems are the symptoms.

The USA (and Europe) was built on a solid living wage middle class. And the upper middle and wealthy lived well on top of this foundation. Now even their lives are being eroded.

William H.

DAVE

August 4, 2009 5:53 PM

The unemployment rate in the nation, which stands at 9.4% currently, may even increase to alarming double digit number making the financial situation even worse for the borrowers to repay. The layoffs of many workers have been permanent and hence, their hopelessness in recovery of the jobs or helplessness to repay mortgage over time looks bleak and they resort to foreclosure than choosing to invest or borrow more money on something that they are not sure whether they would be able to afford in the long run.
Read More: http://www.housingnewslive.com/is-the-housing-market-recovering.php

Ravi Mantha

August 5, 2009 3:39 AM

1950's: A time when the US was *relatively* the most open economy in the world. It enjoyed high wages, and the wealth disparity between the US and the closed economies of the third world and the communist bloc grew to extraordinary (and unsustainable) levels. The rest of the world then realized that they needed to open their economies, most spectacularly China in 1978. As they opened their economies to trade, these countries started to grow faster, and their *relative* wealth versus the US increased and the income gap with the US began to narrow (even though the US also hugely benefited from this opening of third world economies, the growth in poorer countries was more because, well, they were a lot poorer to begin with.)
But here is the funny part. This narrowing of the income gap was interpreted in the US as the taking away of some god-given right of Americans to be fifty times richer than the rest of the world, in perpetuity. So some Americans started clamoring for protectionism and a closed economy, which would be the quickest way to turn the US into a replica of a 1950's third world country. This is why we say that history is cyclical...humans have a poor record of learning from our past,and so we repeat those mistakes over and over again.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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