Getting behind in mortgage payments is one thing, called default. It's estimated that nearly 20 percent of homeowners in default earlier in the year lost their homes to foreclosure in the third quarter. That's a more than a three-fold increase over last year, when the default-to-foreclosure rate was only 6%. Meaning: People are having a harder time coming up with cash to cover mortgage debt. Guess Bush has not heard about this.
Are things going to get worse? You better believe it. Industry forecasters recently estimated that more than $200 billion worth of adjustable rate mortgages will "reset" at higher rates in 2006 and more than $1 trillion will reset in 2007. This situation, compounded by the expected slowing of the economy and the down housing market, which includes a growing inventory of unsold homes, will almost certainly push more homeowners into the foreclosure process.
Despite a lot of talk about the mortgage issue and warnings, Americans are still diving in. Are they falling for the economic hype coming out of the White House? Incredibly, 39 percent of new mortgages in the first half of this year were non-traditional, high risk mortgages compared to an average 2 percent over the last decade.
Consumer debt burden is ballooning. Statistics from the Bureau of Economic Analysis show that the personal savings rate has been running in the red for 16 months. Additionally, the Federal Reserve recently found that consumer debt has outpaced, by 18.7 percent, the amount of income left after the payment of bills each month, meaning that for millions of families the cost of living is substantially higher than their monthly incomes can accommodate. Guess Bush has not heard about this.
An enormous portion of the total personal debt is mortgage debt. Since 2000, mortgage debt in America has doubled, approaching $9 trillion. This year, $400 billion of this debt is coming due in the form of mortgage readjustments. Research firm LoanPerformance forecasts another $1 trillion in mortgage debt will come due next year as the rates on millions more loans reset, sending individual monthly mortgage payments hundreds of dollars higher, or even worse.
In one, not unusual, case in the Washington, D.C. area, a family started with a "teaser rate," just $1,700 a month. They thought it was fixed, but it wasn't. Rising interest rates and deferred interest have now ballooned that payment to $3,700 a month. They can't pay it, and they're not alone. They will lose their home. Credit counselors say they're getting 10 times the concerned calls they used to.
Greedy Elites Conned Us
How has this come about? Clever elites running and ruing our country discovered all kinds of ingenious ways to sell mortgages to Americans still believing in the American dream. They had help from the Federal Reserve. So called unconventional or exotic mortgages were crafted to lure people in and make billions of dollars for the financial sector. The whole trick was to get home buyers to pay as little as possible initially. No cash down, no payments toward the principal and low adjustable interest rates were the main ways to pump up the housing market (the bubble) and, therefore, the whole economy. Yet another gambit was to give mortgages to people that really could not afford them, making them pay higher interest. These "sub-prime" mortgages create a debt to income ratio that is out of whack, which means mortgage payments that take too big a chunk of income. When interest rates rise and other costs of living creep up, people quickly sink and drown in debt.
The maximum percentage for household debt which would include a mortgage, credit cards and car payments is supposed to be around 36%. But now many homeowners find themselves paying most of their income - more than 50 percent - to their mortgage, especially after those monthly payments increase sharply. And they are going up because of rising interest rates, which is happening as wages are at best stagnant and other costs of living are rising. Once, homeowners in a hot housing market could refinance and take money out. In fact, from 2001 to 2005, they took out $500 billion in cash from their home ATMs. This propped up consumer spending as wage incomes stagnated, keeping the economy looking good. Now, with home values declining, they can find themselves forced to pay a lot more or lose their home.
Look at the larger picture. In 1980 household debt, including mortgages, car loans and other borrowing, was $1.4 trillion. Guess what it was in 2005? It had skyrocketed some 745 percent to $11.8 trillion. In 1980 credit card debt totaled $69 billion. Guess what it was in 2005? It had mushroomed to an amazing $1.8 trillion - a 2,500 percent increase! In 1980 credit card debt was just 5 percent of household debt; by 2005 it had jumped to 15 percent. This has happened when people also got suckered into risky mortgages.
Maintaining consumer spending has been the chief economic goal of the plutocracy. And to keep it growing it required Americans to be convinced that they should borrow more and go into greater debt. What kind of political leaders would want to do this to their citizens? The worst kind: Democraps and Republicrooks. Corrupt politicians care more about making corporations profitable and the rich richer. Economic inequality is like a cancer. They are willing to destroy the middle class on behalf of elites and the Upper Class.
Last Episode
What is the next installment in Foreclosure USA? Our enormous national debt owned in large measure by foreign interests can foreclose whenever they wish. Just as we the people lost our sovereign control of our nation, so too will our corrupt government lose sovereign control. With globalization, so heralded and hyped by New York Times elitist and plutocrat Tom Friedman, moving forward, American sovereignty will surely be foreclosed. Thus ending the Foreclosure USA saga.
What can we do to stop Foreclosure USA? Will electing Democraps do it? I doubt it. We the people must take back our ownership of our democracy. With too little political choice, our votes will not do the job. Our money is more powerful. We must politicize consumer spending. We must have some radical, dissent-driven leadership from true progressives to send signals to the tens of millions of disgruntled Americans to cut their discretionary spending to achieve specific' political reforms.
Money and greed have ruined our country. Money and citizen re-engagement can save it.
Are things going to get worse? You better believe it. Industry forecasters recently estimated that more than $200 billion worth of adjustable rate mortgages will "reset" at higher rates in 2006 and more than $1 trillion will reset in 2007. This situation, compounded by the expected slowing of the economy and the down housing market, which includes a growing inventory of unsold homes, will almost certainly push more homeowners into the foreclosure process.
Despite a lot of talk about the mortgage issue and warnings, Americans are still diving in. Are they falling for the economic hype coming out of the White House? Incredibly, 39 percent of new mortgages in the first half of this year were non-traditional, high risk mortgages compared to an average 2 percent over the last decade.
Consumer debt burden is ballooning. Statistics from the Bureau of Economic Analysis show that the personal savings rate has been running in the red for 16 months. Additionally, the Federal Reserve recently found that consumer debt has outpaced, by 18.7 percent, the amount of income left after the payment of bills each month, meaning that for millions of families the cost of living is substantially higher than their monthly incomes can accommodate. Guess Bush has not heard about this.
In one, not unusual, case in the Washington, D.C. area, a family started with a "teaser rate," just $1,700 a month. They thought it was fixed, but it wasn't. Rising interest rates and deferred interest have now ballooned that payment to $3,700 a month. They can't pay it, and they're not alone. They will lose their home. Credit counselors say they're getting 10 times the concerned calls they used to.
Greedy Elites Conned Us
How has this come about? Clever elites running and ruing our country discovered all kinds of ingenious ways to sell mortgages to Americans still believing in the American dream. They had help from the Federal Reserve. So called unconventional or exotic mortgages were crafted to lure people in and make billions of dollars for the financial sector. The whole trick was to get home buyers to pay as little as possible initially. No cash down, no payments toward the principal and low adjustable interest rates were the main ways to pump up the housing market (the bubble) and, therefore, the whole economy. Yet another gambit was to give mortgages to people that really could not afford them, making them pay higher interest. These "sub-prime" mortgages create a debt to income ratio that is out of whack, which means mortgage payments that take too big a chunk of income. When interest rates rise and other costs of living creep up, people quickly sink and drown in debt.
The maximum percentage for household debt which would include a mortgage, credit cards and car payments is supposed to be around 36%. But now many homeowners find themselves paying most of their income - more than 50 percent - to their mortgage, especially after those monthly payments increase sharply. And they are going up because of rising interest rates, which is happening as wages are at best stagnant and other costs of living are rising. Once, homeowners in a hot housing market could refinance and take money out. In fact, from 2001 to 2005, they took out $500 billion in cash from their home ATMs. This propped up consumer spending as wage incomes stagnated, keeping the economy looking good. Now, with home values declining, they can find themselves forced to pay a lot more or lose their home.
Look at the larger picture. In 1980 household debt, including mortgages, car loans and other borrowing, was $1.4 trillion. Guess what it was in 2005? It had skyrocketed some 745 percent to $11.8 trillion. In 1980 credit card debt totaled $69 billion. Guess what it was in 2005? It had mushroomed to an amazing $1.8 trillion - a 2,500 percent increase! In 1980 credit card debt was just 5 percent of household debt; by 2005 it had jumped to 15 percent. This has happened when people also got suckered into risky mortgages.
Maintaining consumer spending has been the chief economic goal of the plutocracy. And to keep it growing it required Americans to be convinced that they should borrow more and go into greater debt. What kind of political leaders would want to do this to their citizens? The worst kind: Democraps and Republicrooks. Corrupt politicians care more about making corporations profitable and the rich richer. Economic inequality is like a cancer. They are willing to destroy the middle class on behalf of elites and the Upper Class.
Last Episode
What is the next installment in Foreclosure USA? Our enormous national debt owned in large measure by foreign interests can foreclose whenever they wish. Just as we the people lost our sovereign control of our nation, so too will our corrupt government lose sovereign control. With globalization, so heralded and hyped by New York Times elitist and plutocrat Tom Friedman, moving forward, American sovereignty will surely be foreclosed. Thus ending the Foreclosure USA saga.
What can we do to stop Foreclosure USA? Will electing Democraps do it? I doubt it. We the people must take back our ownership of our democracy. With too little political choice, our votes will not do the job. Our money is more powerful. We must politicize consumer spending. We must have some radical, dissent-driven leadership from true progressives to send signals to the tens of millions of disgruntled Americans to cut their discretionary spending to achieve specific' political reforms.
Money and greed have ruined our country. Money and citizen re-engagement can save it.
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